Background: Anti-malarial drug resistance in Plasmodium falciparum in India has historically travelled from northeast India along the Myanmar border. The treatment policy for P. falciparum in the region was, therefore, changed from chloroquine to artesunate (AS) plus sulphadoxine-pyrimethamine (SP) in selected areas in 2005 and in 2008 it became the first-line treatment. Recognizing that resistance to the partner drug can limit the useful life of this combination therapy, routine in vivo and molecular monitoring of anti-malarial drug efficacy through sentinel sites was initiated in 2009. Methods: Between May and October 2012, 190 subjects with acute uncomplicated falciparum malaria were enrolled in therapeutic efficacy studies in the states of Arunachal Pradesh, Tripura, and Mizoram. Clinical and parasitological assessments were conducted over 42 days of follow-up. Multivariate analysis was used to determine risk factors associated with treatment failure. Genotyping was done to distinguish re-infection from recrudescence as well as to determine the prevalence of molecular markers of antifolate resistance among isolates. Results: A total of 169 patients completed 42 days of follow-up at three sites. The crude and PCR-corrected Kaplan-Meier survival estimates of AS + SP were 60.8% (95% CI: 48.0-71.4) and 76.6% (95% CI: 64.1-85.2) in Gomati, Tripura; 74.6% (95% CI: 62.0-83.6) and 81.7% (95% CI: 69.4-89.5) in Lunglei, Mizoram; and, 59.5% (95% CI: 42.0-73.2) and 82.3% (95% CI: 64.6-91.6) in Changlang, Arunachal Pradesh. Most patients with P. falciparum cleared parasitaemia within 24 hours of treatment, but eight, including three patients who failed treatment, remained parasitaemic on day 3. Risk factors associated with treatment failure included age < five years, fever at the time of enrolment and AS under dosing. No adverse events were reported. Presence of dhfr plus dhps quintuple mutation was observed predominantly in treatment failure samples. Conclusion: AS + SP treatment failure was widespread in northeast India and exceeded the threshold for changing drug policy. Based on these results, in January 2013 the expert committee of the National Vector Borne Disease Control Programme formulated the first subnational drug policy for India and selected artemether plus lumefantrine as the new first-line treatment in the northeast. Continued monitoring of anti-malarial drug efficacy is essential for effective malaria control.